Sydney, 25 August, 2022: Today, the Australasian Centre for Corporate Responsibility (ACCR) filed significant new and more detailed allegations against Santos over alleged greenwashing.
Last year the Australasian Centre for Corporate Responsibility (ACCR) commenced proceedings in the Federal Court alleging that Santos Ltd has breached the Corporations Act 2001 (Cth) and the Australian Consumer Law by engaging in misleading or deceptive conduct relating to its “clean energy” claims and its Net Zero plan in its 2020 Annual Report.
This was the first court case in the world to challenge the veracity of a company’s net zero emissions target, and raises important questions about the role of carbon capture and storage (CCS) and blue hydrogen in the transition to zero emissions.
ACCR has now filed to expand its case to include alleged greenwashing in Santos’ 2020 Investor Day Briefing and 2021 Climate Change Report, following additional information produced by Santos in the litigation discovery process. Acting on behalf of the ACCR, lawyers from the Environmental Defenders Office (EDO) have filed the amended pleadings in accordance with orders of the Court.
Some of the additional allegations raised by ACCR include:
- Santos’ representations that hydrogen produced from natural gas with CCS (blue hydrogen) is “clean” or “zero emissions” constitutes misleading or deceptive conduct. ACCR says that blue hydrogen production would increase Santos’ greenhouse gas emissions, and it is not practical or commercially viable for Santos to capture all of the increased emissions using CCS.
- Santos’ Net Zero representations failed to disclose that:
- its Net Zero plan does not account for expected production and/or emissions growth from oil and gas exploration opportunities beyond 2025;
- the ‘CCS Expansion’ portion of the Net Zero plan actually reflects offsets which Santos will apparently seek to procure. It does not represent modelled reductions in Santos’ own emissions, but instead is a nominal number making up the difference to net zero;
- the ‘Hydrogen with CCS’ portion of the Net Zero plan also reflects offsets which Santos will apparently seek to procure. Again, it does not represent modelled reductions in Santos’ Scope 1 and 2 emissions, but instead depends upon Santos receiving offsets for reducing its customers’ Scope 1 and 2 emissions through the sale of blue hydrogen.
- the ‘Hydrogen with CCS’ portion of the Net Zero plan also assumed that Santos would blend 30-50% hydrogen into the natural gas network, whereas Santos had no reasonable basis for assuming it could blend more than 10%.
Commenting on the Federal Court proceedings, Brynn O’Brien, Executive Director of ACCR, said:
“The litigation discovery process has revealed further instances where we contend that Santos has engaged in greenwashing.
“We allege that Santos misled investors and the public about its plan to achieve ‘net zero’ by 2040 and to produce “zero-emissions” blue hydrogen. The documents produced by Santos have heightened our concerns that these plans lacked sufficient detail to be put into the market.
“Investors rely on company disclosures and have a right to complete, open and honest information relating to a company they are investing, or considering investing, in.
“Unfortunately ACCR isn’t able to share the Amended Concise Statement at this time. Santos has opposed the document being made freely available on the Federal Court website.
“We look forward to the court’s review and adjudication of Santos’ conduct.”
Zoe Bush, Senior Solicitor at the EDO, said:
“About 70% of the ASX200’s market capitalisation is now covered by net-zero claims. As companies rush to convince the market that they are part of the global energy transition, full and frank disclosure has never been more important.
“There are serious questions about the future of the gas industry in the face of the global energy transition. Gas companies such as Santos increasingly pin their hopes on carbon capture and storage and blue hydrogen to remain financially viable during that transition. It is critical that companies are transparent about the greenhouse gas emissions associated with these processes, and their risks and uncertainties.
“Misleading information can impede an effective and timely response to the climate crisis. It may also leave investors vulnerable to major losses and potentially unfairly skew the market away from companies that are acting responsibly.”